Vodafone Idea Shares Rise as Q2 Net Loss Narrows, ARPU Increases to Rs 166 - Read Now
Vodafone Idea-the troubled debt-laden telecom operator-traded its shares in the green at the end of November 14 as it witnessed a narrower net loss along with improvement in performance metrics through its Q2FY25 results. Consolidated net loss was reported by Vodafone Idea at Rs 7,176 cr as against Rs 8,737 crore for the same period last year. This is also the smallest net loss that it has reported quarterly since inception, at Rs 6,432 crore.
Revenue from operations, however, grew 2% year-on-year at Rs 10,932 crore, up 4% on a sequential basis. Positive revenue trends have boosted investor sentiment as the shares of Vodafone Idea are trading at Rs 7.4 per share at NSE with 0.5% gains at opening bells.
One of the key metrics that shine from the Q2 report of Vodafone Idea is the increase in Average Revenue Per User, or ARPU. ARPU moved up to Rs 166 this quarter from Rs 154 last quarter on a sequential basis. It's an increase of 7.8%. The uptick of ARPU had mainly been triggered due to general hikes in tariffs across the telecom players, which has also witnessed an improvement in customer revenue for Vodafone Idea. Customer revenues have increased by 5.6% every quarter, thus meaning an increase that is positive and emanating from these the most recent reforms on tariffs by the private operators.
Subscriber Base and 4G Growth
Vodafone Idea reported a total subscriber base of 205 million for Q2FY25, a figure affected slightly by the recent tariff hikes. Even though overall subscriber numbers saw a marginal decline, the company reported both year-on-year and quarter-on-quarter growth in its postpaid customer base and the volumes indicated that demand from the premium segment remained steady. The number of subscribers with 4G connectivity has been pegged at 125.9 million, down marginally from 126.7 million in the preceding quarter.
Capex and Investment Outlook
Vodafone Idea has invested heavily in network infrastructure. While the spends have been impressive at Rs 1,360 crore for Q2FY25, which was a very sharp uptick from Rs 760 crore for Q1FY25, the company has announced to spend Rs 8,000 crore in the second half of FY25 to focus on capex on network expansion and service delivery quality.
Yet, Vodafone Idea remains in a very testing financial situation where debt continues to haunt its balance sheet. International brokerage firm JP Morgan has retained the share of Vodafone Idea at a 'neutral' rating and had set its target price for the share at Rs 10 per share. According to the brokerage firm, the firm's future stock performance will largely depend upon the update of management about debt funding.
Stock Price Performance for Last Twelve Months
Vodafone Idea has experienced enormous volatility as the shares have declined more than 47% in the last one year as compared with 24% growth in the benchmark Nifty 50 index. The challenge on its financials and competitive pressure have been driving this southward pressure in the stock, but recent narrowing of losses and improvement in ARPU give it hope that the pressure may be easing off.
Vodafone Idea's tariff push along with network expansion capability provides the company with scope for increased financial stability and operational efficiency. Still, it has much challenging factors ahead, especially concerning its high debt level and requirement for further funding. Investors will keep an eagle eye on any updates from the management of Vodafone Idea regarding its funding plan as well as capex strategy impacts on bottom lines.
